An order that allows traders to target a price at the midpoint of the National Best Bid and Offer (NBBO), while having the option to use an offset amount (so the order can be less aggressive). Price automatically adjusts to peg the midpoint as the markets move, to remain aggressive. For a buy order, the bid is pegged to the NBBO midpoint, or set less aggressively by the amount of the offset, if the offset is used. In calculation, midpoint peg is:

Midpoint Peg = (national best bid + national best offer)/ 2

The national best bid (NBB) is the highest price a trader is willing to pay for a security; while the national best offer (NBO) is the lowest price a market participant is willing to get when selling a security. The national best bid or best offer is the difference (spread) between the NBB and NBO.

The order price adjusts automatically to peg the midpoint if the market moves, and the price becomes more aggressive. If the market moves in the opposite direction, the order will execute (at a less aggressive price), with the offset amount being deducted from the midpoint for a buy order, and added to the midpoint for a sell order. The peg also provide a limit to the price, preventing prevent the order from being executed above or below a certain level.

Midpoint pegged orders allow market participants to spot hidden orders lurking in dark pools. These orders are also instrumental in volatile markets, where traders can execute at the best possible price.

This order is also referred to as a midpoint peg order or a pegged-to-midpoint order.